Traders in precious metals are marking time this Friday, keeping positions light ahead of the September US nonfarm payrolls release. The print carries weight well beyond the headline jobs number: it feeds directly into expectations for the Federal Reserve’s next moves and the direction of Treasury yields, the two forces that have dictated silver’s recent trajectory.
The metal caught a modest reprieve as government bond yields eased, following a 1.0% gain on Thursday that left it at USD 61.35 per troy ounce. The bounce came after a stretch of heavy selling pressure, when climbing Treasury returns and a firmer dollar raised the opportunity cost of holding a non-yielding asset.
A Fed Speaking With Several Voices
Confusion over the policy path has been the dominant theme. Vice Chair Philip Jefferson hinted the central bank may need more time before taking further steps, and New York’s John Williams made the case for patience. Against them stand the hawks: Dallas Fed President Lorie Logan has pushed for at least another 50 basis points of tightening, arguing inflation has yet to settle durably toward the 2% target. Minneapolis Fed President Neel Kashkari added to the uncertainty by floating the prospect of further tightening through 2027.
That split has left market participants hedging their bets, with the dollar’s strength compounding the headwinds for commodities priced in the US currency.
The technical picture reflects the strain. Silver closed Wednesday at USD 60.76 an ounce, down 7.8% over 30 days and 7.1% below its 50-day average of USD 65.40.
Demand Side Loses Its Engine
Amy Gower of Morgan Stanley points to a shift in what had been driving the market. Industrial offtake from the solar sector and inflows into exchange-traded funds had provided support, but higher prices and wider volatility have since put the brakes on industrial consumption.
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Asian data added to the cautious mood. Reports of slowing Chinese industrial profit growth clouded the demand outlook for a metal that, beyond its role as a store of value, is consumed in substantial volumes by manufacturers—making its price sensitive to any sign of cooling global production.
The Supply Story Refuses to Budge
Where the market’s foundation looks firmer is on the supply side. Naeem Aslam of Zaye Capital Markets flagged limited growth in mine output on Tuesday, alongside the prospect of a sixth consecutive annual supply deficit. The Silver Institute puts this year’s expected shortfall at 46.3 million ounces.
The rigidity has a structural explanation: silver is largely extracted as a by-product of industrial metal mining—copper, lead, zinc—so production cannot quickly respond on its own to price signals. Recycling has yet to close the gap either.
For now, though, it is the payrolls data and the rate expectations it shapes that will set the tone in the futures market. Economists expect 90,000 new nonfarm jobs, down from 162,000 the prior month, with the unemployment rate holding at 4.1%. A strong beat would hand the hawks more ammunition and could lift the dollar further. A soft surprise would ease rate worries and give silver room to find its footing around the psychologically significant USD 60 mark.
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